If the quantity of bread demanded rises 2 percent when the price of bread declines 10 percent, then the price elasticity of demand is:
A) 0.2.
B) 1.
C) 2.
D) 10.
E) Cannot be determined.

Question

If the quantity of bread demanded rises 2 percent when the price of bread declines 10 percent, then the price elasticity of demand is:​
A) ​0.2.
B) ​1.
C) ​ 2.
D) 10.​
E) ​ Cannot be determined.

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is 2% / -10% = -0.2. The absolute value is 0.2.

If the Quantity of Bread Demanded Rises 2 Percent When